Travel expenses represent a significant part of every organization’s budget. As expense management is crucial in identifying and addressing the revenue leakages, we see an increased number of business leaders spending significant time in developing effective Travel and Expense management strategies. Forward-thinking leaders are challenging traditional models for T&E management to provide greater transparency to the institution’s financial efficiency and improve compliance.
Four Dimensions of Spend Management Program
Globalization, mobility, and suitable geopolitical conditions for business expansion have led to an increase in business travel. This has consequently led to Travel and Expense management challenges in every organization. Organizations across all industries are facing the challenges of travel and expense audit procedures. By understanding the root cause of these challenges and coming up with a suitable travel and expense management strategy along with the right set of tools, you can ensure seamless employee reimbursement for your organization.
In this article, we are highlighting the top five industry challenges of travel & expense management and how you can solve them. Let’s begin.
Challenge 1: Review and Approval of Expense Reports is Time Consuming
Travel & Expense management tasks are time-consuming due to the detailed procedures involved in the entire expense reimbursement cycle. It becomes tedious for employees and the finance teams to ensure timely submissions and processing of expenses.
A common process without getting into the minor details would look like:
- Upon travel, employee will submit the report along with the receipts by making sure that all the compliance requirements are met
- The identified approving managers review the expenses. These bills could be rejected, asked for more information, or forwarded to the finance team for processing
- Finance teams collate these trip reports and identify claims manually
- Upon review of the expense reports, payroll team makes necessary reimbursement
- For any policy anomalies, finance team would return the expenses to the employee for due corrections
If there is any discrepancy or confusion in any of the steps, it leads to multiple iterations of the process. As a result, the process stretches over a long-time span, making it tiresome as well as frustrating. Also, stringent timelines for finance teams can lead to some missing claims or errors in verification.
Solution: The solution to this problem lies in implementing a fool-proof travel and expense strategy in your organization. Today’s expense management software is equipped with OCR technology that helps finance teams to:
- Scan receipts
- Extract crucial data
- Auto-fill digital expense reports
So, the chances of errors are reduced, the process becomes faster, less dependency on manual procedures all leading to enhanced employee experience. Many solutions offer real-time policy checks to avoid any violations. Also, you can access a detailed digital audit trail that will help you with audits and quick reviews.
By partnering with a competent travel and expense auditing solutions provider, you can leverage modern T&E management solutions to make the complete cycle of review and approval of expense reports faster and more efficient.
Challenge 2: Difficulties of Receipt Tracking Mechanism
Organizations usually ask their employees to attach receipts with every claim in their expense reports, because those receipts act as a proof. It helps finance teams during audits and is crucial for staying compliant. However, receipts can be in multiple formats (paper, e-receipts, etc.) leading to challenges like:
- Handling multiple receipts is tedious for employees, especially when there are ongoing T&E and more so in the case of customer facing teams
- It increases the burden on finance teams to accumulate, verify, and document them
Other than these, many organizations use traditional methods and reimbursement templates that may not have evolved with the changing industry needs leading to:
- Dis-organized expense workflow creates confusion, less compliant, multiple rejections, delay in settlement of payments, which ultimately reduces employee morale
- Incorrect, multiple or missing entries going unnoticed in few occasions
All these challenges lead to increased difficulties in managing and tracking receipts.
Solution: In the modern Travel and Expense world, there are various applications that can provide compliant automated expense workflows. Thanks to the introduction of AI and OCR technology, tedious expense report processing is automated leading to better risk mitigation and lower turnaround time. You’ll be able to act on incorrect & double entries identified by the system. These T&E management solutions simplify the receipt tracking mechanism by enhancing the existing processes.
Challenge 3: Lack of Insights into Spending Trends
Spend visibility is crucial for organizations to ensure they operate within the planned budgets. Availability of quality data reports in real-time is a key to decision making in fast-paced business.
Lack of Insights into spending trends is a challenge because of:
- Dependency on the legacy systems
- Integration & collaboration challenges with upstream systems
- Complexity of the existing system design, that may not support real-time data output
Cost optimization can be effective when the organization is capable of spotting fraudulent spending, identifying revenue leakage and ultimately fixing the financial loopholes with the appropriate controls. However, most organizations fail to spot those issues.
Solution: The solution to this problem lies in utilizing the advisory services of a competent travel and expense management solutions provider. You can leverage the expertise of your partner to harness the potential of T&E management platform through:
- Advanced BI reports and smart dashboards to extract insights
- Identification of fraudulent and duplicate expenses to curtail revenue leakages
- Quicker decision making leading to better financial health
Challenge 4: Unclear Travel and Expense Policies
A significant reason behind out-of-policy expenses and policy violations is the absence of clear and comprehensive travel & expense policies. Unclear travel and expense policies lead to:
- Poor reimbursement turnaround time
- Increased errors in employee expense reporting
- Increased out-of-policy expense claims
- Increased verification workload for finance teams
Solution: As you partner with a T&E solutions provider, you will get to formulate comprehensive travel and expense management policies. You can pre-set policies according to the job roles and other parameters like the nature of expenses, geography of the spent, currency, etc. This will help you set up an accurate approval workflow and integrate your travel and expense policies within the organizational framework. This leads to increased compliance, reduced policy violations, increased productivity, a reduced workload on financial teams, and, of course, fewer errors!
Challenge 5: Delayed Reimbursement Cycles
Several reasons lead to delayed reimbursements. Mostly, this happens in a manual travel and expense management scenario, where employees keep postponing travel & expense reporting tasks due to their time-consuming nature. As reports are submitted late, the entire cycle gets delayed.
Missing receipts, policy violations, inaccuracy, and mistakes that result from this step lead to the entire cycle being delayed.
Solution: Leverage on modern T&E solutions provider to help your financial teams introduce additional controls, such as
- Validation parameters during expense submissions
- Optimizing the expense approval workflow
- Enabling automated notifications for unsubmitted/pending reports
Having a competent travel and expense management solutions partner helps you decide which technologies and solutions would fit your needs. Experts can help you make the best decisions concerning your travel & expense management policies and solutions by factoring in different aspects like your budget, availability of resources and digital literacy of your workforce.
The travel and expense management solution provider will be able to handle all the necessary tasks to process an employee reimbursement claim, including submitting the request to the accounting team, to moving it back to the employee for review, to the management for approval, and to the payroll team for automatic reimbursement. In addition to saving you time, the T&E solutions partner will provide you with a complete audit trail and a full accounting of business expenses, which means you will be able to determine the compliance and operational metrics.
If you are interested in learning more about how travel and expense management solutions can save your business’s time and money while making the system compliant with the organizational policies, say a hello to us at email@example.com